What is greenwashing?
If we simplify, greenwashing is a misleading business or advertising phenomena where companies address environmental and social challenges without any proofs to promote their products or services. Greenwashing firstly appeared in the tourism sector and it was recognized as a gimmick in 1986 by environmental activist Jay Westerveld. Hotels began asking guests to reuse towels, claiming that it was a company water conservation strategy, although there were no other environmental actions with more significant environmental impact issues at that time.
Types of Greenwashing
Different authors prepared different classification of greenwashing. The general one divides greenwashing into two different types, the first one is regarding firm level, and the second one is regarding product or service level. Each of them consists of two forms, claim and executional. There are some other more eloquent categorizations, we present the most frequent ones:
- Selective type – for some products or services companies select and stress just one aspect, which could be eco-friendly but keep secret some environmentally problematic properties at the same time. For example, paper from sustainably harvested forests is promoted as “green” but paper mills use chlorine for bleaching and produce a lot of greenhouse gas emissions during the production.
- Vagueness type – labels “All-natural”, “Non-toxic”, “Green”, “Environmentally friendly”, “Eco-conscious” belong to this type of greenwashing. We can say that some product is 100% natural, but some toxic elements (e.g. uranium, mercury, formaldehyde, arsenic) are natural, too. Another example is “non-toxic” because everything is toxic in certain dosages
- No proof type – many environmental claims cannot be substantiated by easily accessible supporting information or by reliable third-party certifications – a very common example is the percentage or other statistic information that is not verified with something that could prove it.
- Irrelevance type – some environmental claims may be truthful but are unimportant or unhelpful for consumers seeking environmentally preferable products. An example is the “CFC-free” label which is irrelevant due to fact that CFC is abandoned according to the law.
- Lesser of two evils type – this type is characteristic for harmful products in itself. One example of this type is organic cigarettes. The “Organic” label does not reduce the hazards of smoking. Another example is a fuel-efficient sport-utility car.
- Fib type – some statements are simply false; we can also characterize them as lies. The majority of them are connected with appealing to ecological certificates.
Why is greenwashing harmful?
Greenwashing causes mainly negative consequences and affects consumers, companies or corporations, stakeholders and society.
- Consumers: Greenwashing leads to information overload, making it difficult for a customer to evaluate and a consumer may become confused. Secondly, customers lose trust in the individual brand attitude and the other similar brands and products. The most harmful effect caused by greenwashing regarding the consumers is a negative effect on consumer green trust and become sceptical about environmental trends.
- Companies: The only positive effects caused by greenwashing belong to companies or corporations, but it is short-lived. Marketing campaign of “green” products promote a sale at the beginning but after that can cause fatal financial consequences and a bad reputation. Moreover, workers can lose confidence in their company and it can lead to a loss of confidence among customers, investors and non-governmental organizations.
- Stakeholders: Greenwashing is misleading phenomena not only for consumers but also for stakeholder. They are misinformed about the real social performance of a company. Greenwashing behaviours betray their belief and other corporations may lose confidence in greenwashing firm reducing their likelihood of cooperating and exchanging resources with this firm. By forming a partnership with a greenwashing company, they may fear being identified as greenwashes themselves. The effect of greenwashing on the relationship with these stakeholders will eventually lead to a decline in financial performance, detrimental to investment.
- Society: When all is said and done, a victim of greenwashing is society as a whole. Firms are less motivated to make environmentally-helpful products, customers are confused and the level of green and eco scepticism increases. Many products and services that would deserve to be recognized as environmentally friendly could not be recognized so. Benefits of the greenwashing are poor and short-lived while there are many negative consequences.
How to recognise and avoid greenwashing?
The most important worriers against greenwashing are NGOs; some other activists and the media can also help to find the pieces of evidence for greenwashing. The Center for Media and Democracy published SourceWatch to track greenwashing produced by corporations. It consists of analyzing eight major fields: cash flow, business networking, business correspondence, company’s secrets, easy access to company information, response to the review, international consistency and consistency over time.
According to the mentioned fields and the synthesizing the frameworks of different NGO’s Gallicano (2011) prepared the list of simple statements for helping to detect greenwashing. Company’s response either the webpage or on the annual report on these statements helps us to identify greenwashing:
- The business is inherently dirty but advertises environmental initiatives.
- The company promotes environmental efforts or achievements, which could divert attention from its bigger environmental problems.
- The company claims a product is a green based on a few attributes without considering a full life cycle analysis.
- A product may be “green” but distracts from the environmental impacts of the product category.
- Environmental claims are made that cannot be proven by data or third-party verification.
- Environmental claims are overstated or exaggerated.
- Claims are poorly defined and misunderstood by consumers (e.g., natural).
- Claims contain confusing pseudo-scientific verbiage.
- The company claims a product or activity is “green” even though there are laws either restricting or mandating such.
- The company promotes “green” initiatives while lobbying against environmental laws and regulations.
- The company makes false claims.
- The company gives the impression of third-party labels or endorsements, where none exist.
- The company fails to acknowledge that an informed debate exists.
Another important question is how to reduce or avoid greenwashing. There are different options to reach this, either through:
- Regulation – we have to implement legal, legislative and societal changes. Regulations should be uniform at least on the federal level but even better on the international level. One concrete proposal is to create an independent labelling authority. Corporate social responsibility (CSR) communication needs to be more strongly controlled. Sustainability rating could also reduce greenwashing.
- Control – we have to integrate a third party into the regulatory arena. Public anti-greenwashing enforcement is better than private and international is better than national or local. The audit system should be independent and we have to encourage NGOs and media for scrutiny.
Greenwashing vs. green marketing
As distinct from greenwashing, green marketing is a well-meaning phenomenon. It represents authentic and honest presentations of true eco-friendliness on the part of companies, usually in their manufacturing processes. Green marketing is however often obstructed by green scepticism since it is associated with greenwashing practices.
The first definition related to green marketing dates back to 1976 when Hennion and Kinnear highlighted that Ecological Marketing was concerned with marketing activities that have served to help cause environmental problems and that may serve to provide a remedy for environmental problems. Over the last decades, other definitions have been provided and the concept has evolved and become more structured. Recently the concept moving away from being a tool of traditional marketing to becoming a strategy affecting the whole company, from focusing on specific environmental problems to taking into account global sustainability issues, from regarding specific products and industries to pervade the whole market.
The authors divided the evolution of the green marketing phenomena into three main stages. The first stage is called “Ecological Green Marketing” the second one “Environmental Green Marketing” and the last one “Sustainable Green Marketing”.
The Green marketing strategy entails four different steps (segmentation, targeting, positioning and differentiation) and the concept of green marketing consists of so-called 4P (product, price, place, promotion). An important promotional tool for green marketing is represented by ecolabels. Ecolabels can improve the sales and the image of a product, encourage manufacturers to account for the environmental impact of their products, make consumers more aware of environmental issues and help to protect the environment.
- de Freitas Netto, S. V., Falcão Sobral, M. F., Bezerra Ribeiro, A. R., da Luz Soares, G. R. 2020: Concepts and forms of greenwashing: a systematic review. Environmental Sciences Europe 23-19.
- Yang, Z., Nguyen, T. T. H., Nguyen, H. N., Nguyen, T. T. N., Cao, T. T. 2020: Greenwashing behaviours: causes, taxonomy and consequences based on a systematic literature review. Journal of Bussiness Economics and Management 21-5.
- Gatti, L., Seele, P., Rademacher, L. 2019: Grey zone in – greenwash out: a review of greenwashing research and implications for the voluntary-mandatory transition of CSR. International Journal of Corporate Social Responsibility 4-6.